Retail Sales Accelerated in September: October 14 – 18

Retail sales grew in September. Here are the five things we learned from U.S. economic data released during the week ending October 18.

Retailers report a solid sales gain in September. Retail and food services sales grew 0.4 percent to a seasonally adjusted $714.4 billion. The Census Bureau measure was up 1.7 percent from a year earlier, with sales over the past three months 2.3 percent ahead of the comparable 2023 months. Lower prices at the pump led to a 1.6 percent drop in gas station sales. Removing that and the flat auto dealer/parts sales data gives you core retail sales jumping 0.7 percent in September and 3.7 percent from a year earlier. Sales rose at retailers focused on apparel (+1.5 percent), health/personal care (+1.1 percent), groceries (+1.0 percent), sporting goods/hobbies (+0.3 percent), and building materials (+0.2 percent). Restaurant/bar sales jumped 1.0 percent. Sales declined at electronics/appliance stores (-3.3 percent) and furniture retailers (-1.4 percent).  

Manufacturing output declined in September. The Federal Reserve estimates manufacturing production decreased a seasonally adjusted 0.4 percent after gaining 0.5 percent in August. Durable goods production fell 1.0 percent, with “widespread” declines across different segments. Nondurable production eked out a 0.2 percent gain. Overall industrial production slipped 0.3 percent in September, with mining down 0.6 percent and utility output rising 0.7 percent. Manufacturing output was 0.5 percent below year-ago levels, while overall industrial production was off 0.6 percent from a year earlier. Manufacturing capacity utilization fell 4/10^ths of a percentage point to 76.7 percent, placing it 1.4 percentage points below its year-ago reading and 1.6 percentage points under its 52-year average.

Housing starts were flat in September. Housing starts slowed 0.5 percent to a seasonally adjusted annualized rate (SAAR) of 1.354 million units, leaving the Census Bureau measure 0.7 percent below year-ago levels. Single-family home starts increased 2.7 percent to an annualized 1.027 million units (+5.5 percent versus September 2023), while multi-family unit starts declined 4.5 percent to 317,000 (-15.7 percent versus September 2023). Looking towards the future, building permits dropped 2.9 percent to an annualized 1.428 million, 5.7 percent below year-ago levels. Completions also declined, falling 5.6 percent to 1.680 million units (+14.6 percent versus September 2023).

Homebuilder sentiment…er…builds slightly in October. The National Association of Home Builders’ Housing Market Index (HMI) added two points to 43. Even with the gain, it has been six months since the HMI has exceeded 50, meaning more builders currently see the housing market as “poor” than “good.” The HMI improved in three of four Census regions, with only the Northeast experiencing a decline. Improving were measures for current single-home sales (+2 points to 47), expected home sales (+4 points to 57), and traffic of prospective buyers (+2 points to 29). The press release notes, “builders are feeling more optimistic” despite “low” housing affordability.

The federal government deficit swelled in FY2024. The U.S. government collected $4.919 trillion in revenue during the recently completed fiscal year, up 10.8 percent from the previous year. This included $2.426 trillion in individual income taxes, $1.710 trillion in social insurance and retirement receipts, and $530 billion in corporate taxes. Outlays surged 10.1 percent to $6.751 trillion. The biggest spending categories in descending order were Social Security ($1.461 trillion), Medicare ($1.078 trillion), health ($912 billion), net interest payments ($882 billion), and national defense ($874 billion). The resulting FY2024 deficit of -$1.833 trillion was 8.1 percent larger than the prior fiscal year.

Other U.S. economic data released over the past week:

• Jobless Claims (Week ending October 12, 2024, First-Time Claims, seasonally adjusted): 241,000, -19,000 vs. the previous week, +39,000 vs. the same week a year earlier). 4-week moving average: 236,250 (+12.2% vs. the same week a year earlier).
• Import Prices (September 2024, All Imports, not seasonally adjusted): -0.4% vs. August 2024; -0.1% vs. September 2023. Nonfuel Imports:  +0.1% vs. August 2024; +1.8% vs. September 2023.
• Export Prices (September 2024, All Exports, not seasonally adjusted): -0.7% vs. August 2024; -2.1% vs. September 2023. Nonagricultural Exports: -0.9% vs. August 2024; -1.8% vs. September 2023.
• Business Inventories (August 2024, Manufacturing and Trade Inventories, seasonally adjusted): $2.582 trillion (+0.3% vs. July 2024; +2.4% vs. August 2023.
• Treasury International Capital Flows (August 2024, Net Foreign Purchases of U.S. Securities, not seasonally adjusted): +129.8 billion (July 2024: +$135.7 billion; August 2023: +$84.2 billion).

The opinions expressed here are not necessarily those of Kevin’s current employer. No endorsements are implied.